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MCC Board Considering Allowing Students to Help Pay for New Construction

Thursday night, the McHenry County College Board will consider imposing a $10 per credit hour fee to force students to help pay for new and/or improved facilities.

Here’s what the minutes of the Committee of the Whole meeting say about that:

At the February 17, 2016 Committee of the Whole meeting, the Board of Trustees discussed the recommendation to proceed with the planning and design of a Science Lab and Health Sciences renovation project, pending the ability to raise and have in hand the necessary funds to pay for the project.

During this discussion, the Board also agreed that a student infrastructure fee would be used toward the proposed renovation, again pending the viability of the project.

It was determined that if the College and Friends of MCC Foundation are unable to raise the fundraising goal of $15,000,000.00 by December 31, 2016 (time that documents would go out to bid), the project would not be viable and therefore stopped.

College administration will provide the Board of Trustees a fundraising/capital campaign project plan overview with timeline in March 2016 for review.

Proposed location for new labs and student activities space.

I am frustrated that readers cannot figure out who took what position in the debate from these minutes, so I asked Trustee Chris Jenner what happened and here’s what he sent me:

[At the Committee of the Whole meeting] they finally presented us with a proposal I might actually be able to get behind.

It addresses the stuff I truly feel needs to be fixed — updated biology and health sciences labs.

No fterendum or tax hike.

No health club.

No public – private partnership.

Base cost of the project is $34 million, with interest, a total of $40 million.

It does include new square footage, but not nearly the amounts that have been proposed in the past.

There’s also a fair amount of renovation / re-purposing.

They are banking on $15 – $20 million in Foundation / donor cash, obviously the biggest question mark. They’ve been poking around, and believe they can get it.

The rest of the dough is to come from a $10 per credit hour infrastructure fee to be used to pay off bonds over 20 years. Tuition and fees for the next school year need to be voted on this month, i.e., at the Thursday 2/25 Board of Trustees meeting. They want us to approve the $10 per credit hour fee, with no tuition increase, next Thursday.

I said I could support it under 2 conditions:

1. If the projected donor money doesn’t show up by this time next year, the fee was a one year only thing and it goes away completely.

2. If the project moves forward, whatever fees are in place at the time the bonds are retired (they proposed 20 years) are reduced by the amount of the increase we approve next week.

Jenner added the following:

I can still support an expansion, partially paid for by an infrastructure fee that would be eliminated should the donor funding not materialize, and that would be retired upon retirement of the bonds if the project moves forward.

Upon further study and input from constituents, I think we’re still shooting for too much. I fully support bringing our science labs up to date, and providing much better space for our student veterans.

I’m concerned that the financing plan presented appears to have not considered the increased costs of maintaining the additional space — utilities, cleaning, etc. I’m also not convinced that the amount of additional space proposed is needed now, or at any time within the time frame of the study.

I’d like to know how much the construction and maintenance costs (and the infrastructure fee and needed foundation support) would drop if we were to approve a one story addition built with the ability to add a second story later.

So $10 per credit hour is approximately $300 per year from a full time student?

Which is $600 over 2 years?

That’s quite a bit of money.

If students manage their money well and come away with a 4 year college degree with ideally some savings, or no debt, or debt that can be retired comfortably in 5 years, then they are off to a good start to be able to save for retirement.

Every $10 counts.

The whole notion of a home being an asset is up in the air with our current bond debt, unfunded liabilities, and past due bills in Illinois.

Certainly there will be another request for tax or fee hike before the bonds for this project would be completely retired in 20 years.

What is the next anticipated need….lay all the cards on the table.

And, what does the existing bond debt service schedule (principal and interest payments) look like, we could look at the current CAFR, but lay that out for taxpayers too.

What is the pension situation (IMRF & SURS).

Including the SURS pro-rated amount for unfunded SURS pensions which is easier to determine courtesy of GASB 68, which is important given that state money is drying up now that a new Governor is not playing Santa Claus.

1. How many labs exist now?
2. How much space do the labs take up?
3. What is the utilization rate of the existing labs?
4. How many labs will they have when they’re done?
5. How much space will be remodeled or built?

If the number of labs is going up, then this needs to be justified.

If the area is increasing substantially, then this needs to be justified.

If the firm making the recommendation does all this, then we can have a reasoned discussion on how to pay for it.

After just a slight amount of research I found that modern school lab space should cost no more than $500/sq. ft. (half that to renovate/retrofit).

Ventilation of noxious gas requirements, tabletops that won’t react with spilled acid, floor and ceiling containment materials in case of hazmat release, etcetera are undoubtedly already present in the current rooms.

Lab rooms 2500 sq ft at $1,250,000 each should be the max necessary.

How many needed?

Each such room holds 24 students.

How many science lab enrollees? School Board?

You must have this information.

What is it they are doing over there on that board?

Do they even research the barest amount before commissioning (again and again) expensive consultant reports on how to spend $40 million dollars?

And, what amount are manufacturers/employers willing to contribute to the really big ticket items like equipment and software, which will lead to a skilled workforce ready to go, schooled on specifics for that employer upon graduation?

I would be MORTIFIED to vote YES to spending millions of dollars of OTHER People’s MONEY without having thoroughly, independently researched the issue.

I think the headline here would be more accurate if it said “MCC Board Considering FORCING Students to Help Pay for New Construction.”

Based upon the presentation documents, it appears as though the students are on the hook to cover $15 million of the project.

However, the details indicate that they really have to shell out over $21 million or more than half of the total project costs. They assume the fee will be driven off of 110,000 annual credit hours.

If I recall correctly, it was only about 3 or 4 years ago that MCC’s total annual credit hours was north of 140,000.

Given the declining enrollment seen by all of the feeder districts, isn’t it highly likely MCC’s declining enrollment trend will continue for the next decade?

And with higher MCC student fees over time, does that not also put a damper on demand, making it that much harder to hit the 110,000 hour annual target? (See ECON 101-Elasticity of Demand).

So what happens if this trend continues, combined with higher fees/costs all causing MCC to fall below 110,000 hours?

Either fees are increased even higher in order to raise the necessary revenues to make the annual debt service payments, putting further negative pressure on demand or MCC makes up the shortfall by cannibalizing other revenue sources.

Mr. Jenner is correct to be concerned about the incremental costs (utilities/maintenance/janitorial) associated with increased space.

However, aren’t there potentially larger incremental operating costs not identified in this presentation?

I am assuming that the additional instructional capacity being added is required to teach classes/subjects that can’t be taught today because of current capacity constraints.

So, once the space is added, MCC will need to pay for additional staff to deliver more science-related classes.

What is the staffing plan and associated costs once the new space comes on-line?

Put another way: After you spend $23.8 million on the Science facilities portion of the project, then what?

How many people need to be hired? What are they going to teach?

How much will that cost annually?

Will it generate any incremental tuition revenue-or not?

I apologize if they’ve already done all of that work, but the only documents I’ve seen over the last several months posted on MCC’s site have been focused on construction plans/costs.

There was a study done in May 2015 which talked about classroom wish-lists for the whole of MCC which resulted in an October presentation identifying about $78 million in costruction costs.

Now that the trustees have narrowed the scope, should there not be some higher level of specificity demanded as to what is going to be happening in these classrooms and, maybe more importantly, what the annual financial impact will be to MCC?

(exerpt)
“The California State University system, the largest in the nation, is planning to dramatically expand the use of virtual labs for general education science courses, which are typically populated by non-science majors who are required to take a course with lab work to graduate.”